European Payments Initiative: Unifying Europe Internationally

Payments are governed by leaders who have considerable international clout. Thanks to these solutions, consumers and merchants can make transactions everywhere… almost. The main banking devices, Visa and Mastercard, hold the monopoly, closely followed by WeChatPay and AliPay. These American and Chinese solutions, respectively, leave little room for Europe, which is complying with these uses. It therefore has only the solution of using these devices, and does not have a system specific to its continent. But that may well change. An ambitious programme could be operational as early as 2022…

Reducing market fragmentation through pan-European payments

Sixteen European banks in five countries have considered creating a unified payment solution in Europe. Like Visa, or Mastercard, this solution could be used by all consumers and merchants on the continent. This would provide a common payment solution for all EU member states. An effective way to facilitate transactions between different countries. Today, ten European countries do not accept card payments from other European Union countries. Thus, by introducing a common payment solution, this would reduce market fragmentation. It would then establish itself as a new payment standard for all types of transactions, both online and in-store… This payment solution therefore aims to be the first single payment solution exclusively in Europe.

In the midst of the giants that dominate the market, Europe was a customer, but did not find its place. Thus, the development of the European Payments Initiative will have a positive impact on Europe’s place in the balance. Its objective is to be more independent in the global payments market. Carried by Germany, Belgium, Spain, France and the Netherlands, it aims to place itself as an equal solution. The EPI is expected to be operational by 2022. Already, six French banks are working on the development of this system, in agreement with other countries. At a time when European trade and tourism are important, it is time to offer a digital payment solution that can be used all over Europe. It is therefore essential to deploy this system as easily as possible.

Less instantaneous European initiatives

EpiT is not the first pan-European payment solution to exist. Indeed, there is already the SEPA transfer, exclusively for Europe. It covers the following countries in particular. The 27 member countries of the European Union, Iceland, Liechtenstein, Norway and Switzerland, belonging to EFTA, the principality of Monaco, San Marino and the United Kingdom. It is then possible to transfer funds under the same conditions in France and in all the countries of the SEPA space. In Europe, not all countries use the Euro. The SEPA transfer completes the conversion immediately during a transfer, if both accounts do not have the same currency. The only downside is the fees applied in transactions, especially for the beneficiary. With the EPI, payments will be instantaneous, and especially without security problems. The business thus receives the money directly into its account, and no longer has to wait several days.

Payment solutions allow people who travel often not to get stuck when they make a purchase. If some businesses or even some countries prevent payment with certain cards, the EPI should provide a real answer. Planned for Europe at first, it could work well internationally, in the long run. A solution that could shake up the market dominated by the United States…

Sources:

European Central Bank – April 2019 – EN – Card payments in Europe – current landscape and future prospects: a Eurosystem perspective

Savings Bank Insurance – SEPA transfer and SEPA levy.

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